* Rouble extends gains after 1.8% jump on Tuesday
* MSCI EM stocks eye best day in two weeks
* Polish zloty supported by strong data, rate hike hopes (Adds, graphic, details on Russian rouble, updates prices)
April 14 (Reuters) - Falling global bond yields helped lift emerging market currencies and stocks on Wednesday, with Russia’s rouble extending gains on hopes of easing tensions between Moscow and Washington over Ukraine.
The rouble rose 0.4%, having marked its best day in five months on Tuesday after a phone call between U.S. President Joe Biden and Russian President Vladimir Putin, which the Kremlin said was a proposal to normalise ties.
Simmering tensions over eastern Ukraine had pushed the rouble down to five-month lows over the last few weeks on fears of Western sanctions against Moscow over military action.
“It would be premature to claim that risk perceptions ought to subside... while the Biden administration was always viewed as potentially more hawkish towards Russia than its predecessor, the timeframe has been shortened,” analysts at Commerzbank said.
“Had things not escalated around Ukraine, Biden’s Russia policy might have taken longer to be fleshed out. Now the prospect of concrete action has, indeed, drawn nearer.”
Russian dollar-denominated bonds also surged on Wednesday.
The MSCI index of emerging market currencies rose 0.4%, with the dollar hitting three-week lows after an uptick in U.S. inflation did not spark wider fears about rising inflation and the Federal Reserve’s tapering, pushing down U.S. bond yields.
Higher U.S. yields have weighed on emerging market currencies and debt this year as investors bet on a swift U.S. economic recovery prompting rate hikes by the Fed.
But even as fears of a hawkish Fed appear to be dissipating, sentiment towards emerging market assets remains constrained by a second wave of COVID-19 cases.
In Europe, the Middle East and Africa, Turkey’s lira rose 0.5% even as Ankara announced a fresh round of virus-related curbs.
Investors are now watching for an interest rate decision on Thursday after President Tayyip Erdogan, in a shock move last month, replaced a dovish central bank governor with a critic of high interest rates.
The Polish zloty outpaced its central European peers after the country marked a robust current account surplus in February.
A central bank rate-setter also said the bank should consider a rate hike, with inflation set to rise above the bank’s target range.
Emerging market stocks marked strong gains on Wednesday, with MSCI’s index of equities set for its best day in two weeks. Asian markets also gained for the day.
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
Reporting by Ambar Warrick in Bengaluru, Editing by William Maclean and Krishna Chandra Eluri